Question
On October 1, 2017, Flint Corporation sold a harvesting machine to Pearl Industries. Instead of a cash payment, Pearl Industries gave Flint a $139,000, two-year,
On October 1, 2017, Flint Corporation sold a harvesting machine to Pearl Industries. Instead of a cash payment, Pearl Industries gave Flint a $139,000, two-year, 12% note; 12% is a realistic rate for a note of this type. The note required interest to be paid annually on October 1, beginning October 1, 2018. Flints financial statements are prepared on a calendar-year basis. Required:
a) Assuming that no reversing entries are used and that Pearl Industries fulfills all the terms of the note, prepare the necessary journal entries for Flint Corporation for the entire term of the note
. b) Repeat the journal entries under the assumption that Flint Corporation uses reversing entries, but only up to and including October 1, 2018.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started